U.S. Stock Futures Bounce On Hopeful Jobs Report
U.S. stock futures rose strongly Friday after a surprisingly strong report on hiring in July. The report comes a day after the market's worst single-day drop since 2008.
The economy added 117,000 new jobs in July, and hiring in May and June were not as bad as reported previously, the Labor Department said. The unemployment rate inched down to 9.1 percent from 9.2 percent, partly because some unemployed workers stopped looking for work. Health care providers and manufacturers added jobs.
Still, employers must add twice as many net jobs per month to rapidly reduce unemployment. The rate has topped 9 percent in every month except two since the recession officially ended in June 2009.
The mixed economic picture failed to dampen the spirits of traders who were shaking off a day in which the Dow Jones industrial average fell 513 points.
Before the market opened, Dow futures rose 72 points, or 0.6 percent, to 11,443. Standard & Poor's 500 futures gained 9, or 0.8 percent, to 1,207. Nasdaq 100 futures jumped 12, or 0.5 percent, to 2,221.
Futures had been down before the jobs report as investors eyed selling overseas. Tokyo, Hong Kong and China all closed down 4 percent. Taiwan lost 6 percent. Investors are fearful that the weak U.S. economy might lead a global slowdown in demand.
In Europe, shares recovered some of their losses after plunging to their lowest levels in more than a year. Italy and Spain were the only countries whose main indexes rose, despite data showing both economies barely grew in the second quarter.
Thursday's sell-off was the Dow's ninth-worst day on record in terms of points lost. It wiped out the Dow's remaining gains for 2011. U.S. markets officially have experienced a correction, falling 10 percentage points from their highs this spring.
The harrowing day followed two weeks of almost uninterrupted selling on Wall Street. By one broad measure kept by Dow Jones Indexes, part of CME Group Inc., almost $1.9 trillion in market value has disappeared.
Friday's jobs report offered one of the strongest jolts of good economic news since stocks hit their recent highs on April 29.
Traders have focused on a torrent of bad economic news since the U.S. government struck a deal last weekend to raise the nation's borrowing limit, averting a threatened default. Manufacturing and the service sector are barely growing. The economy expanded in the first half of the year at its slowest pace since the recession ended in June 2009.
Economists at Bank of America Merrill Lynch estimate there is a 35 percent chance of another recession within the next year. Only three of the three S&P 500's ten industry groups are up for the year: Health care, utilities and consumer staples. Traders consider those companies to be relatively recession-proof.
Fears that about the debts of big eurozone countries like Italy and Spain continued to spread as European leaders called emergency meetings and sought to contain the crisis.
Fears of a slowing global economy pushed benchmark oil for September delivery was down 28 cents to $86.35 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it fell as low as $82.87. On Thursday, crude tumbled $5.30 to settle at $86.63.
The yield on the 2-year Treasury note fell to 0.29 percent, after brushing a record low of 0.26 percent earlier Friday. Frightened investors are buying bonds, sending their prices higher and their yields lower. The yield on the benchmark 10-year Treasury note rose to 2.46 percent after hitting a low since last year of 2.34 percent.
Shares of consumer product maker Procter & Gamble rose after the company said that its fourth-quarter revenue and net income jumped by double digits because of strong sales in emerging markets. The company said it expects a slowdown in the current quarter as developed economies struggle.
Media company Viacom Inc. said its net income and revenue increased more than analysts expected in the second quarter because of strong advertising sales and fees from cable companies.
Shares of Charles Schwab Corp. lost 11 percent in premarket trading, the most in the S&P 500, amid fears that a flight by investors might hurt the financial advisor's revenue.
Shares of Priceline.com Inc. surged 12 percent, the biggest gain in the S&P, after the company reported that it earned far more than expected in the second quarter as travel bookings on the website increased.
This program aired on August 5, 2011. The audio for this program is not available.